French wine and spirit producer Pernod Ricard has announced its acquisition of V&S Vin & Sprit AB from the Swedish government. The acquisition, which has occurred after months of speculation over the future of V&S, will see Pernod Ricard take control of the Absolut vodka brand. The purchase is indicative of the growing popularity of premium positioned vodkas in the European market.

Pernod Ricard’s $9.4 million purchase of V&S has seen the French producer take control of Absolut vodka, the world’s fourth largest international spirit brand. The takeover follows competitor Diageo’s recent joint venture that was established to distribute Ketel One super-premium vodka and boost its market share outside of the US, and Pernod Ricard’s acquisition is being seen as its opportunity to develop the Absolute vodka brand outside of the US. Although shares in Pernod Ricard have fallen since the deal was announced, the acquisition is a good opportunity to develop a premium brand in a market that is seeing new vodka releases being given a more upscale image.

In 2007, the European vodka market had a value of $33,029.1 million, however, the market is forecast to have a relatively low compound annual growth rate (CAGR) of 1.9% during the period 2007 to 2011. Analysis of new product launches recorded on the Productscan database suggests that, in order to boost growth rates, vodka manufacturers are giving brands a more upscale image.

Indeed, in an attempt to give new vodkas a more upscale image, manufacturers are using a variety of methods to increase the level of enjoyment and experience associated with new vodka releases. Methods being used more regularly in the market include emphasizing the purity and clean taste of new vodkas by highlighting any complex production techniques and the origin of ingredients. Furthermore, manufacturers are also attempting to give vodkas a more upscale image by heightening the sensory appeal of new vodka offerings. This is being done by releasing beverages with more experimental flavors (including hotter flavors like chili) and promoting brand heritage in order to boost levels of authenticity.

As these trends become more common in the European vodka market, Pernod Ricard will benefit from obtaining a recognized brand that has already successfully used these now prevalent techniques to push the boundaries of premium vodka offerings.

Related Research: Premium Company Profile: Pernod Ricard SA